December 3rd, 2013 Business & Market Update

Some strength overnight in China as the service sector continues to produce strong numbers in November.  Markets in China were up 0.69%.  Japan also rallied on an additional $53bn of stimulus that will be put into the economy in the first quarter of 2014 to offset some tax increases.  Markets there were up about a half a point.

In Europe, factory orders continue to be weak as November numbers came in at a 4 year low, however the UK construction sector continued to expand in November showing that economy continues to decouple form the rest of Europe.  Markets in the region are off about 1.50%.

Us and Canadian futures are both off this morning by about a quarter point on profit taking and continued concern the tapering will occur sooner than thought.  Our US strategist Tony Dwyer again this morning confirmed his conviction on the equities market while indicating a correction could occur.  His summary:

Summary. Our fundamental thesis — (1) historically low inflation, (2) ultra-easy Fed, (3) positive trajectory in the economy and EPS, and (4) valuation expansion — remains firmly in place. Until we get consistently stronger economic numbers OR core inflation expectations begin to rise aggressively, we expect the Fed to stay on course and keep short rates pinned through 2014. Even with the prospect of a correction in the market, we continue to urge investors to not fight the Fed or the tape, and with the uptrend in place, the economy in the fundamental sweet spot and the SPX trading at 16x our conservative 2014 estimate of $115, our conviction level for SPX 1,955 in 2014 remains high. Our favored sectors looking out into 2014 remain the Financials, Industrials, Health Care and Information Technology.

Chrysler reported November auto sales increased at 16% vs. 11% estimated.  Also, BMO released their earnings which beat on both top and bottom lines, however about $0.19 per share came from securities gains which has traders selling off the stock in the premarket.  The company also raised the dividend by 5.5% and authorized a $15bn share buyback.



Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 26th 2013 Business & Market Update

Overnight in Asia markets were slightly lower as oil markets recovered after the slide yesterday based on the Iran nuclear deal.

Europe at midday is flat despite some continued strong numbers coming from the service sector that is adding jobs at the fastest pace in more than 6 years.

US and Canadian futures are also flat this morning despite strong Housing Start and Permits numbers for October. The estimates of 933,000 were beat handily by the actual number coming in at 1,030,000. These numbers are late in coming based on the government shut-down that occurred earlier in October. The Case-Shiller Housing Index was also released this morning and it showed a year over year 13.29% increase which was in line with estimates.

In Canada, the Finance Minister suggested late yesterday that the budget would be balanced in 14 months which is sooner than was anticipated only 10 days ago. Good news none the less if you believe the shell game that is played in government finance. Also, the big news out of Canada today is the new deal that the NHL struck with Rogers Communications. The deal valued at $5.2bn will run over 12 years and give the media company total control of the NHL property in Canada. In essence CBC and TSN (Bell Media) are out. Rogers has suggested they have a deal with CBC to broadcast the Sat night game of the week and will maintain the French and other language options that the CBC offers. The deal takes about a quarter of the CBC’s total revenues which will hurt the crown corporation. TSN it would seem is out other than some regional games where they have some ownership rights (Leafs, Winnipeg etc.). For those of you that like Don Cherry and Ron Maclean it would seem for now they are still on Sat nights and will be doing some playoff games.

Gold is up about 3.00 to 1245, oil is up a couple of cents to 94.12 and the loonie is down 0.06 to 94.81. Debt markets are flat this morning with US and Canada 10 year bonds trading at 2.73% and 2.55% respectively.

Lastly, as I mentioned yesterday I would be providing some insight into the conference I attended last week and start the process this morning with an article by Mark Kiesel, Head of Global Bond Portfolio Management for Pimco. The theme was what not to buy and finding the sweet spot in the debt and equity markets based on the current environment that we are ensconced in. I found Mark quite positive, down to earth and pragmatic in his big picture view which translated nicely into his sector analysis. Take the time to give it a read it you have a moment.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth

November 25th Business & Market Update

With this week being the start of the holiday season in the US, markets will be fairly quiet going into the Thanksgiving holiday on Thursday and while markets will be open Friday volumes will be much lower.  I will be on the road Thursday and Friday in and out of meetings both days, but accessible and will be checking in often.  The Morning Blog will be attachments only Thursday and back to normal Friday.

Overnight in Asia, markets were mixed with Japan up 1.5% and China down about a half a point.  Japan’s rise is on top of analysts suggesting that Abenomics starting to take effect as the deflationary period in the region is coming to an end.  China on the other hand after a 7% move higher in the last week alone was off on profit taking.

Europe is up a about a half a point on solid US markets, the Iran nuclear deal with the US suggesting the country will curb further nuclear development and comments from the ECB that the region will not slip back into a full recession as growth continues to be positive.

The US and Canadian futures markets are higher this morning by about a quarter point on much of the above news along with the fact the dollar is stronger this morning.

The stronger US currency is causing more concern for gold investors as the commodity is off 10.00 to 1234.00, oil on the Iran deal is down 1.20 to 93.563 and the loonie is trading lower by a quarter cent to 94.80.  The US and Canadian 10 year bonds are lower this morning with yields at 2.75% and 2.59% respectively.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 19th, 2013 Business & Market Update

A sloppy overnight and morning session in both Asia and Europe with markets in both regions off.  Asia is down about a quarter point on profit taking after a couple of strong days and Europe is off on weak earnings reports.  The OECD suggested that the ECB increase the pace of asset purchases to avoid a Japanese style deflationary economy going forward.

The US and Canadian futures are virtually flat this morning with a slight bias to the downside.

Gold is flat this morning at 1272, oil is off a quarter to 93.43 and the loonie is down slightly to 95.85.  Bond markets are a little soft this morning with yields in the US and Canada at 2.69% and 2.54% respectively.

Mandate company Home Depot released earnings this morning and beat on both earnings and revenues and provided stronger guidance going into the next year.

Lastly, I will be away tomorrow through Friday at the Pimco Due Diligence conference out west.  Pimco is the biggest fixed income money manager on the planet handling more than $2trillion.  Most of my mandates hold the Monthly Income Fund and I am looking for more ideas going into the New Year.  The conference will be highlighting fixed income themes going forward into the rising interest rate environment that may be coming in the next year and how to capitalize on it.  As you are all aware we have had a positive 30 year run in the bond markets and based on the size of the asset class and the weight in most allocation models the impending rise in rates will cause capital erosion and poor returns if simple buy and hold strategies are maintained.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 6th, 2013 Market / Business Update

In Asia overnight markets were generally quiet, however Japan did move higher on great sales and earnings numbers from Toyota.  Japan closed up 0.80%.

Europe bounced back and at midday the EuroStoxx is up 0.70% mainly on the thought that at the ECB policy meeting Thursday some further monetary accommodation will be provided and continued positive economic data.

US and Canadian Futures are trading higher by a third of a point on positive earnings news.

Gold is stronger by 9.00 to 1317, oil rebounded 0.56 to 93.93 and the loonie is stronger by 0.10 to 95.76.  The 10 year US and Canada Bonds continue to creep lower as yields are now at 2.65% and 2.54% respectively.

Mandate earnings news saw, Magna, Keyera and Gibson Energy all beat estimates.

Lastly, unless you have been living under a rock for the past week or so you would have seen the debacle that has become the City of Toronto and the politicians running it with the emphasis on the Mayor.  I would suggest, that regardless of what this public official has done to embarrass himself and the city, he has done what he was elected to do.  Of course this is no excuse for his behavior.  What amazes me is the fact the Ontario government threw almost $1bn away on two gas plants that were never built and the Federal government has been embroiled in a Senate debacle and cover-up for the last year and at the end of the day no one seems to care about either of these situations, in the media anyway.  I am now officially politically agnostic as I just don’t trust any of them!

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 5th, 2013 Business & Market Update

Overnight in Asia, Chinese markets were stronger by about a third of a point on news out of the government that growth of 7.2% is required to provide strong employment over the next year.  Japan was also higher as bargain hunters stepped in after a few days of losses.

In Europe the forecasts are coming for 2014 and 2015 and as mentioned yesterday, the road is bumpy but it would seem the big economy is going in the right direction.  2013 will end slightly positive with GDP at about 0.4%.  The forecast for 2014 is 1.1% and 2015 1.7%.  Also, the UK Service Sector advanced at the fastest pace in more than 16 years.  None of this news however is what the markets were looking for as an interest rate cut and or more asset purchases by the ECB is what traders want.  To that end markets in the region are down about a point at midday.

US and Canadian futures are trading down about a quarter point this morning as many are still setting up for the onslaught of economic news coming toward the end of the week.

Gold is up slightly this morning to 1314, oil is off 0.29 to 94.33 and the loonie is down about a quarter cent to 95.68.  Bonds are off slightly with the US and Canadian 10 years’ yielding 2.62% and 2.50% respectively.

Mandate earnings out this morning are showing beats across the board with CVS Caremark, Brookfield Renewable Energy and TransCanada all coming in ahead of estimates.  All three securities are trending higher in the pre-market.

Lastly, a few other things that caught my eye this morning:

  • ·         Twitter has increased the price of the IPO to the mid $20’s from the mid teens.
  • ·         Blackberry settled in down about 17% yesterday and looks to open where it closed this morning as the deal makers are trying to spin the latest developments, I continue to suggest avoidance.
  • ·         EnCana, once the darling of the natural gas industry in Canada this morning came out with a big earnings miss and a re-structuring program that will see the company downsize by about 20%.  The company is also cutting its dividend by two thirds and spinning off Clearwater Minerals in an IPO.
Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

October 29th 3013 Business & Market Update

Asia, sold off another half a point overnight as the US dollar continued to sag with most suggesting the US Fed will stay the course on debt purchases.

Europe on the other hand is up more than three quarters of a point on strong earnings news from many large caps in the region.

US and Canadian futures are flat this morning waiting for the Fed release on Wednesday.

Gold is lower by about 7.00 to 1346, oil is down 0.53 at 98.15 and the loonie is flat at 95.75.  Ten year US and Canadian bonds are also quiet this morning at 2.52% and 2.42% respectively.

The Case Shiller Housing Index was stronger than expected for September as prices advanced by 0.93% vs. 0.65% indicating the housing advance while cooling somewhat is still headed in the right direction.

Two big Pharma companies are reporting today with Pfizer out this morning with a beat on earnings and revenues meeting estimates.  After the close tonight Gilead Sciences will report.

Lastly, Apple reported last night and beat estimates by about half a point with revenues coming in slightly above estimates.  A couple of interesting points of interest:  This quarter marks another where gross margins have fallen dipping under the 40% for the first time.  Also, more than 60% of revenues in the quarter were from international sales.  The stock fell on the news after hours but is trading higher this morning in the pre-market.  It is obvious that as the company continues with its world wide sales initiatives, the margins for the products in the lesser developed world are lower and it would seem the trend is continuing.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management